Resources Committee Guts Governor Walker’s Oil and Gas Tax Credit Reform Legislation
FOR IMMEDIATE RELEASE
March 22, 2016
Juneau – Much of the savings associated with Governor Bill Walker’s proposed reform to Alaska’s flawed and overly expensive oil and gas tax credit system has been lost because of the actions of the House Resources Committee. House Bill 247 was passed out of the committee tonight. The original bill was significantly altered by members of the House Majority to remove $450 million in savings and new revenue.
“The current oil tax credit system is not sustainable. In some cases the state is picking up over 100 percent of a company’s costs,” said House Resources Committee member Representative Geran Tarr (D-Anchorage). “I want to support the oil industry and in some cases can see the usefulness of co-investing in exploration and development projects. However, the current system is out of balance and needs to be reformed. House Bill 247 in its current form is unrecognizable from the original bill.”
The House Majority members on the House Resources Committee made significant changes to HB 247, including eliminating the Governor’s proposed increase to the minimum production tax floor. This will cost Alaska an additional $100 million in new revenue just as it’s needed the most to help fill the projected $4 billion deficit. The original version of HB 247 sought to cap some credits at $25 million per company, but the new version increases the cap up to $200 million per company.
“Alaska is staring a recession square in the eye, which means we can no longer afford an oil tax credit system that results in us spending hundreds of million more in credits than we take in from our shared oil resources,” said House Resources Committee member Representative Andy Josephson (D-Anchorage). “The loss of savings in this bill coupled by the bad news from the new revenue forecast means we are another $750 million in the hole in just a couple of days. Alaska can’t afford the current oil tax credit system and the House Resources Committee has made the issue worse, not better.”
Since 2006, the state has issued over $7 billion in oil and gas tax credits. In FY 2015 and FY 2016, the state paid out approximately $566 million more in tax credits than it received in production taxes, which was Alaska’s top source of revenue until recently.
With passage through the House Resources Committee, HB 247 now moves to the House Finance Committee for consideration. In the coming days, Rep. Tarr and Rep. Josephson plan on working closely with their colleagues on the House Finance Committee to fix the flaws in HB 247 to make the bill useful in addressing Alaska’s fiscal crisis.
For more information, please contact Alaska Independent Democratic Coalition Press Secretary Mike Mason at (907) 444-0889.
###
